Industry Pushes Back Against Army Report

Sep. 23, 2013 - 03:45AM
|

BAE, makers of the US Army's Bradley Fighting Vehicle, suppliers and labor unions say the Army is misreading what the industrial base will go through when the Bradley stops production in 2015 without a replacement program. (US Army)

WASHINGTON — BAE Systems CEO Linda Hudson, the heads of 40 suppliers that help sustain the company’s Bradley Fighting Vehicle program and several labor unions penned a highly critical letter to Army Secretary John McHugh on Sept. 19.

The letter calls the Army to task for misreading the issues that the industrial base will face if the service goes through with stopping production of the Bradley in 2015 with no follow-on program to replace it until 2019.

The letter says that the company and the unions have “concerns with the Army’s recent report” and “we question the report’s initial observations and its implications on the Army’s short- and long-term plans for the Bradley industrial base.”

The industry partners did offer an olive branch of sorts, writing “we are hopeful that a dialog now will result in a more substantive and realistic plan which will allow us to retain the critical capabilities and jobs” in a supply chain that is responsible for 7,000 jobs across the country.

The July report, commissioned by the Army and carried out by consulting firm AT Kearney, was titled “M1 Abrams Tank Upgrade and Bradley Fighting Vehicle Industrial Base Study Preliminary Findings”

The report paints a rather grim picture of the manufacturing needs over the next several years, conceding that while “the demand profile for programs within the Army’s ground combat systems indicate a significant decrease in demand between 2015 and 2019” the government’s early findings indicate that the downturn should be sustainable since “the industrial base’s current manufacturing network has a significant amount of overcapacity.”

The industry group says that the initial 18-page report — a copy of which was obtained by Defense News —“lead us to question the potential final recommendations” which are due to be delivered to Congress on Dec. 15.

The most critical flaw in the report, BAE and its associates charge, is that it states since there is a shortage of skilled workers in the industrial base, shedding some workers over the next several years while keeping a small core of the most skilled is a “manageable risk” for the Army and for industry.

While AT Kearney and the Army said they did a deep dive into the supplier base for the report, the letter to McHugh charges that “few” of BAE’s Bradley suppliers were contacted for the study.

The government report also states that when it comes to heavy manufacturing capacity, the US defense sector actually “exceeds known demand for current programs and for planned future programs,” and that given the current defense downturn “most suppliers have mitigated the overall revenue impact with other work.”

BAE and its partners say that, in fact, just the opposite is true: Even those companies that found other work have done so outside of the defense industry and that “allowing these companies to exit the defense sector will impose resource, capability and cost implications on our nation’s armed forces now and in the future.”

Beginning in 2014, many ground vehicle programs will begin to transition from production to sustainment, and if some key new programs like the Joint Light Tactical Vehicle (JLTV), Ground Combat Vehicle (GCV), Armored Multi-Purpose Vehicle (AMPV) and the new Marine Corps amphibious vehicles manage to live past the coming budget ax, vehicle production is scheduled to ramp up sharply in 2019.

But until that happens, ground vehicle manufacturers like BAE, and General Dynamics, Navistar, and Oshkosh will struggle to hold on to as much of its critical supplier base as it can, with fewer orders to fill.